Money demons loom large for women

Conflicted feelings, control issues sabotage security

SAN FRANCISCO (MarketWatch) -- Spending beyond your means. Accepting a low salary to avoid being seen as greedy. Lying to friends or a spouse about the cost of your purchases.

Both sexes can fall victim to irrational money behavior, but these are some of the ways women especially undermine the financial security they're seeking, financial experts said.

Women may not realize it, but their reluctance to face up to their conflicted feelings about money may cost them dearly, said Liz Perle, author of the new book "Money: A Memoir."

After recounting some of her own financial mistakes, Perle spoke with more than 200 women about their money habits and found similar complexities emerged. Watch interview with Perle.

"No one wants to admit they shave a couple bucks off the price of a lipstick when they're telling a friend or say 'I got it on sale' when it never was."

"We're kind of embarrassed by our appetites," Perle said. "It leaves us in this highly ambivalent relationship with money."

Separating material desires and emotional needs from the business of making a living proves difficult for many, she said. "Money and love are very commingled for women, and money, and fear and money, and scarcity -- the bag-lady fear."

"When you get people really opening up on this subject, they have to confront a lot of things they don't want to confront," Perle said.

"They might have some feelings they don't think are right to have, like the fact there is still this sort of Prince Charming fantasy. It doesn't have to be a man anymore. It could be a parent's going to bail you out or a job's going to bail you out, or a lottery ticket or the novel in your drawer."

Salary negotiation fears

The sexes have become more alike in their money lives in the last generation as women joined the work force en masse. But some of women's behaviors, such as a general female aversion to negotiations, may be holding them back.

Nowhere is such self-denial more crucial than with the salary negotiations for a first job, when women may feel the least confident asking for what they think they're worth.

Working women earned 80% of men's median weekly earnings in 2005, up from nearly 63% in 1979, according to the Bureau of Labor Statistics (BLS.)

In what could explain some of the chronic wage gap, men are more than four times as likely to negotiate a first salary, said Linda Babcock, co-author with Sara Laschever of the 2003 book "Women Don't Ask: Negotiation and the Gender Divide."

What's left on the table over the long term can be staggering: The consequences of failing to negotiate a first salary can lead a person to lose more than $500,000 by age 60, Babcock said. Losses accumulate, she said, "because someone who comes in at higher salary, even if you're getting the same rate increases, gets more every year."

"We're not really responding to market conditions when we decide to negotiate or not," she said. "We're responding to how we've been socialized as girls."

Women don't need to have competitive offers to inquire about boosting the initial one after they have it, though negotiating room varies by industry, Babcock said. Generally, her Carnegie Mellon University students with a master's degree in public policy and management, for example, ask for 10% to 12% more than what they're offered, and they often settle for 7% to 8% more, she said.

This sort of gender disparity is only beginning to be understood, but employers may want to look at their human-resource practices differently, Babcock said. "If we offer a man and woman the same thing, we're going to get unequitable salary outcomes because men are more likely to negotiate."

Money troubles in relationships

Even though women constitute nearly half the U.S. work force, persistent differences in the pattern of women's work lives can create stress in their relationships, be it marriage or cohabitation.

Men and women still don't appear to be on the same page about how to share control of the family purse strings. Nearly two-thirds of women disagree that the partner who contributes more in household income should have a bigger say in deciding nonfinancial matters, but less than half -- 49% -- of men were in that camp, according to a recent study of 1,500 wealthy men and women from PNC Financial Services Group.

Income differences and changes in a partner's work status, such as when a woman takes time off to raise children or when a man loses a job, can upset the balance of power, said Bruce Bickel, a managing director of PNC Advisors, a wealth-management firm in Pittsburgh.

"In my experience, finances for women are more an issue of security and for men more an issue of significance," he said. "Neither is wrong. I say, 'Let's talk about how you blend your need for security, home and children versus your need for significance, in being a provider.'"

Bickel encourages couples to discuss their beliefs and values about money early so they can establish some norms of financial operation. Once that's done, they can move from being responsible people to responsible partners and providers, he said.

"In our culture, we have taught both men and women to view money as a right rather than a responsibility," said Bickel, who's also a Reformed Baptist minister. "When people start talking about rights as opposed to responsibilities, they run into problems."

"What kills a relationship is ownership, meaning 'I have a right to it,' as opposed to stewardship -- "How do we manage this?'"

Whether couples choose to have joint accounts or go the mine, yours and ours route, the important thing is they agree and understand each other's position, he said.

That also applies to tensions that arise when one person is used to being in charge and has trouble sharing power in the relationship, which was the case for a remarried woman Bickel recently counseled.

"The breakthrough was when she said 'I need your help. I can't do this. It's foreign to me,'" he said. "When she said this, we made wonderful strides."

Another couple was contributing nearly equal amounts to their household but had to adjust when the wife wanted to stay home with the kids. Bickel said he told the husband, "You have a greater responsibility to keep her informed than if it were 50-50." By that he said he means discussing money decisions before making them, not after.

Generational catch-up

Much of the preparation to make sound financial and employment decisions begins in childhood. Still, fewer girls than boys are getting the message to see themselves as enterprising providers, Perle said.

That has to change, she argued, so girls aren't told they're just good with children for babysitting while boys are told they're entrepreneurial for moving lawns.

In married couples where both partners have earnings, one in four wives outearns her husband, and the number is one in three for all married couples, according to the BLS.

As more women graduate from college than men, the prospect of having more women with higher earnings requires both sexes to brush up on their communication and conflict-resolution skills, Perle said.

"Right now we're caught in this wacky gap for women where we're working in our fathers' worlds and still holding ourselves up to the mythic 50s mother standard," she said. "Women have to realize all these forces are at play with their pocketbooks."

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